Bank segregates toxic assets as it reports loss

LONDON (AP) — Royal Bank of Scotland will segregate up to 39 billion pounds ($62 billion) of toxic assets to clean up its balance sheet in the financial crisis aftermath.

The taxpayer-owned bank's decision Friday comes with the support of the U.K government, which had reviewed the possibility of a more formal split into a so-called "bad bank." Ex-Bank of England Gov. Mervyn King, had argued taxpayer losses might be lightened that way.

Instead, RBS will create an "internal bad bank," meaning it will segregate high-risk assets and manage them separately from the rest of the bank.

The bank's third-quarter net loss narrowed to 828 million pounds from 1.4 billion in the same period last year.

RBS is more than 80 percent taxpayer owned after receiving a 45 billion-pound bailout in 2008.

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